Baker McKenzie’s latest analysis of Refinitiv data shows that the value of mergers and acquisitions (M&A) in the first half 2021 (H1 2021) soared in South Africa, and that deal value also increased in Nigeria in the first six months of 2021, but Kenya experienced a slight decrease in both deal value and volume in H1 2021.
South Africa
The value of M&A transactions in South Africa in H1 2021 amounted to USD 52 billion, with 169 deals announced in the period. Compared to the first half of 2020, transactions volumes decreased by 8% but deal value increased by 958% in the first half of 2021.
Refinitiv data shows that the volume of domestic transactions increased slightly to 80 deals, a 10% increase year on year (Y-o-Y). Domestic transactions in South Africa in H1 21 were worth USD 46.7 billion, a dramatic 2148% increase year-on-year (Y-o-Y). Further, cross-border transactions increased 17% Y-o-Y to 89 deals, with deal value surging 251% to USD 5.4 billion.
According to Marc Yudaken, Partner in the Corporate/M&A Practice at Baker McKenzie in Johannesburg, "Despite the excellent start to 2021, the unrest in South Africa threatens to impact the positive strides made in terms of foreign investment into the country in the first six months of this year. For the sake of South Africa’s post-pandemic recovery, the turmoil engulfing our country has to be ended before investors are forced to seek less risky alternatives. Foreign investors will only ramp up their investments if they are confident their assets are safe. They need political and economic certainty and must have confidence that there is rule of law in the countries in which they invest."
High technology companies were the primary targets for inbound deals in South Africa, with 12 transactions, representing a 200% in deal volume Y-o-Y and a deal value of USD 160 million, an increase of 1997% when compared to the same period last year.
Wildu du Plessis, Head of Africa for Baker McKenzie, explains, “It’s no secret that African consumers have shown a growing reliance on technology across multiple platforms, even well before the pandemic struck. The growth of the digital economy across the continent has naturally been accelerated by the pandemic and this unabated demand for technology has caused extensive cross-sector disruption, with the financial, energy, transport, retail, health and agricultural sectors all seeking opportunities to expand their tech infrastructure in order to acquire the necessary skills and […]